Google CEO Sundar Pichai has a 4-word advice on leadership

Sundar Pichai was speaking of Google's performance as it scaled when he mentioned that scaling a company is a complex thing.

Sundar Pichai recently shared some leadership advice with MBA students at Stanford University. One of them which caught the attention of the students were four words from his address--"reward effort, not outcomes".

Pichai was speaking of Google's performance as it scaled when he mentioned that scaling a company is a complex thing. "One of the counter-intuitive things is companies become more conservative as they grow," he said during the interview with the students.

"You have a lot more cash. You have a lot more resources. But companies tend to become more conservative in their decision making. And so encouraging the company to take risks and innovate and be okay with failure and reward effort, not outcomes."

The Google CEO was quick to add that following the same advice is very hard to do in an organization. "People tend to reward outcomes, which means over time, the organization becomes more conservative. They take safer bets and so on. So a lot of scaling is about making sure you preserve the good things you had in the early days. And that gets harder as the company becomes bigger," he said.

"You have to work harder at it. But I think a big part of what we try hard to do is to keep that culture of innovating with technology, building products, shipping things. And so that’s one of the many things."

Last week, Sundar Pichai noted that Google’s productivity as a company is not in keeping with its headcount, the CEO said in the meeting which was attended by more than 170,000 full-time Google employees.

“I wanted to give some additional context following our earnings results, and ask for your help as well,” Pichai began, referring to the company’s Q2 earnings report. “It’s clear we are facing a challenging macro environment with more uncertainty ahead.

“There are real concerns that our productivity as a whole is not where it needs to be for the headcount we have,” he added.

The 50-year-old asked employees to “create a culture that is more mission-focused, more focused on our products, more customer focused. We should think about how we can minimize distractions and really raise the bar on both product excellence and productivity.”

Read more: Google to slow down hiring; read alphabet CEO Sundar Pichai’s memo